The 2024 presidential election is rapidly approaching, and investors are closely watching to see how the outcome could impact their portfolios. The two main contenders, former President Donald Trump and current Vice President Kamala Harris, have markedly different policy proposals that could have significant implications for various sectors of the economy. One key area of divergence is in their tax policies.
Trump has proposed cutting the corporate tax rate from 21% to 15%, which Bank of America estimates could boost earnings by 4%. Harris, on the other hand, wants to raise the corporate tax rate to 28%, potentially resulting in a 5% hit to company earnings. Trump’s stance on tariffs is another point of contention.
He has advocated for universal tariffs, which supporters argue could foster corporate growth. Critics, however, warn that such a move might lead to higher inflation and negatively affect stocks. The candidates also differ on energy policy.
Election’s impact on investments
Trump’s pro-drilling stance could be a boon for the energy sector, but it might also lead to oversupply and lower prices. During his previous presidency, energy was the worst-performing sector.
Meanwhile, the clean energy sector has seen fluctuations, performing poorly under President Joe Biden after a strong showing during Trump’s tenure. However, with Harris rising in the polls, clean energy stocks have recently outperformed. Despite the potential impact of the election, some analysts believe that the market’s trajectory may not be heavily influenced by who wins the presidency.
Artificial intelligence continues to be a dominant force in driving market volatility, while gold has hit all-time highs and outperformed stock prices since October 2022. Steve Sosnick, chief strategist at Interactive Brokers, notes that gold remains a solid investment regardless of the election outcome, benefiting from the Fed’s rate cut, rising geopolitical tensions, and expectations of an inflationary Trump presidency. As the election draws nearer, investors are advised to stay informed about the candidates’ policies and consider the broader economic implications.
However, it is important to remember that historically, the U.S. stock market has trended upwards over the long term, regardless of which party holds the White House or controls Congress.
